LAS VEGAS — Even with an optimistic short-term outlook, thereare many reasons to be cautious about returning to a robust economyin the medium or longer term, according to William Emmons, chief economist with the Federal Reserve Bankof St. Louis.

Speaking at the ACUMA conference at The Cosmopolitan in LasVegas on Monday, Emmons outlined an argument he said was fermentingat the Federal Reserve.

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Chairman Ben Bernanke and other Federal Reserve executives believe theeconomy will eventually return to levels seen in the middle of thepast decade before the Great Recession, Emmons explained, whileother Federal Reserve executives argue that the economy in2005-2007 was overheated by the credit and housing bubbles andshould not set a standard for future economic growth.

The argument matters, Emmons said, because if Bernanke iscorrect the measures the Federal Reserve has taken can only helprestore the economy, albeit slowly. But if the other FederalReserve executives are correct, the Fed's most recent efforts tostimulate more economic growth could turn out to be significantlyinflationary.

Emmons also pointed to shifting demographic and housing financetrends which, he said, may end up bringing the nation a housingeconomy going forward that “feels a lot like the one we have now,bouncing on the bottom and growing by fits and starts.”

In particular, Emmons mustered data to show that housing priceshistorically track income and wages and are unlikely to spike muchhigher than wages or income for very long.

“A market's housing prices might spike in a given area for agiven period of time, but they always come back to income,” hesaid.